Houston-based Phillips 66 Partners LP (NYSE: PSXP) will acquire Phillips 66’s (NYSE: PSX) interests in three pipeline systems, Phillips 66 Partners said Feb. 16.
The acquisition includes one-third equity interests in the limited liability companies that respectively own the Sand Hills and Southern Hills NGL pipeline systems, and a 19.46% equity interest in Explorer Pipeline Co., which owns the Explorer refined products pipeline system.
Sand Hills is a 720-mile NGL pipeline system that provides takeaway service from DCP Midstream and third-party plants in the Permian and the Eagle Ford basins to fractionation facilities along the Texas Gulf Coast and the Mont Belvieu, Texas market hub. The system has a capacity of 200,000 barrels per day (Mbbl/d) and is expandable up to 350 Mbbl/d with additional pumping stations.
Southern Hills is an 800-mile NGL pipeline system that provides takeaway service from DCP Midstream and third-party plants to the same fractionation facilities. The system has a capacity of 175 Mbbl/d.
The 1,830-mile Explorer refined products system connects to refineries and market centers from the Gulf Coast to the Midwest, and handles 660 Mbbl/d.
In exchange, Phillips 66 will receive total consideration of $1.01 billion consisting of $880 million in cash and about 1.7 million newly issued PSXP units. These will be common units and general partner units, and the general partner will retain its 2% interest.
The transaction is scheduled to close in March, Phillips 66 Partners said. The transaction includes about $65 million of Explorer Pipeline’s nonconsolidated debt.
The transaction’s terms were approved by the board of directors of the general partner. Evercore Partners was the financial adviser to the conflicts committee, and Vinson & Elkins LLP was its legal counsel.
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